Cryptocurrency is becoming increasingly talked about in mainstream culture. Nevertheless, many people still lack clarity on exactly what cryptocurrency is, why it’s important, and what kinds of cryptocurrency (if any) they need to know about.
In order to help address this disconnect, we’ve written this useful guide on the three cryptocurrencies everyone’s talking about. Keep reading for a simple, easy-to-digest breakdown on everything you need to know about cryptocurrency.
We promise that you’ll feel a lot better equipped to discuss cryptocurrency and maybe even use it yourself after you’ve finished.
First things first, there’s no point in talking about the most popular forms of cryptocurrency if you don’t actually know what cryptocurrency is.
Cryptocurrency, also known as crypto, sounds a lot more complicated than it is. Basically, it’s just another form of payment out there. It’s a completely digital currency that can be used to purchase goods and services. It’s also often bought as an investment in the hopes of selling it for big potential profits down the line, but more on that later.
Although we’re going to be discussing the top three cryptocurrencies out there in this article, it’s important to note that there are currently over 11 000 different kinds of publicly traded cryptocurrencies. Together, their total value as of August 2021 is $1.66 trillion dollars.
Unlike most currencies, cryptocurrency is managed by the people who use it. It’s totally decentralized and isn’t reliant on any central financial authority.
Cryptocurrency is powered by blockchain technology, which is a kind of database that stores information like financial transactions. This adds a lot of security into cryptocurrency transactions for three key reasons:
Now that you’ve got a better idea of what cryptocurrency is, let’s talk about the top three kinds of cryptocurrency that everyone’s always talking about: ethereum, bitcoin, and tether.
Ethereum is one of the biggest names in the cryptocurrency world. It was created in 2015 by a group of developers including Joe Lubin and Vitalik Buterin. As of August 2021, it’s the second most valuable cryptocurrency in the world.
If you want to buy ethereum, there are several things you should know about it. First, it’s important to note that ethereum was created by a group of people who are big fans of blockchain technology. They wanted to create a secure space that would allow developers like themselves to create things like decentralized applications (also known as dapps). They were also well versed in everything blockchain and used it to their advantage to create ethereum.
Their goal wasn’t only to create a cryptocurrency. They simply did so to have a currency to use within the Ethereum blockchain. They were more focused on creating a safe digital space where information and applications could be stored and shared.
As a result, ethereum functions as a marketplace for everything from financial services to games to apps. Users and owners can view and pay for products and services with Ether cryptocurrency and know that everything is happening in an environment that’s secure from threats like fraud and theft.
Basically, ethereum sets itself apart from other cryptocurrency because of its highly programmable nature and ambitions beyond digital currency.
Ethereum’s main criticisms relate to its relatively high fees, energy consumption, and overall volatility, like many other forms of crypto.
When people think of cryptocurrency, they often think of Bitcoin. This is the case for a good reason: Bitcoin is widely regarded to be the original cryptocurrency. It was created in 2009 by Satoshi Nakamoto, although much of the information behind the development of Bitcoin still remains a mystery. For example, it’s still unknown whether Bitcoin was created by one developer or a whole group operating under a pseudonym.
Bitcoin first came about to address a need in the market. That is, people wanted a way to make payments with lower fees than traditional banks and without any centralized authority or institution involved. Under this framework, Bitcoin came to life.
Like most cryptocurrencies, Bitcoin operates with decentralized peer-to-peer and blockchain technology. Basically, the Bitcoin system encompasses a group of over 10 000 computers known as nodes or miners. All these computers run Bitcoin’s blockchain and have access to the same lists of blocks, transactions, and more. This makes for a very secure and extensive network.
As the first cryptocurrency, Bitcoin is especially important because it spurred the creation of hundreds of other cryptocurrencies, known as altcoins.
During its relatively short lifespan, Bitcoin has been through many booms and busts of value and success. Although many people think that cryptocurrency is the key to getting rich quickly, this definitely isn’t always the case. Many people have invested unwisely in Bitcoin and ended up losing a lot of money.
To give you an idea of how much the value of Bitcoin can vary, it was first initially traded for $0.0008 to $0.08 per coin in July 2010. The highest value Bitcoin has reached was $64,863 per coin in April 2021.
Bitcoin is most often criticized because it’s such a volatile and high risk, high reward place to invest your money. Nevertheless, it’s status as the biggest and most valuable cryptocurrency appears to be here to stay.
Last but not least, Tether is the third most powerful cryptocurrency in terms of value at the moment. It started being traded in 2015, but it’s been riddled with controversy and problems at different moments in time. It’s also a unique kind of blockchain cryptocurrency that we haven’t talked about yet: stablecoin.
A stablecoin is a kind of cryptocurrency that aims to keep its value stable (in contrast to more volatile currencies like Ethereum and Bitcoin). Owing to this, it’s often used by investors who want to put money into the crypto market without being subjected to its characteristic extreme ups and downs.
Tether is a fiat-collateralized stablecoin. Fiat currency refers to government-issued currency, so that means that Tether is backed up by government-issued currency in a bank account. Specifically, Tether is matched up with the US dollar and maintains a 1:1 ratio with it (although that doesn’t mean you can trade it in for USD according to that ratio).
This is both an advantage and a disadvantage. While Tether’s stablecoin status makes it more reliable, it also relies on banks, financial authorities, and legal institutions to varying degrees. It was also subjected to a large-scale hack in 2017 and has had some suspect audit practices in the past.
There are several reasons why cryptocurrency is important and frequently talked about. However, the main reason is because many people see it as the future of currency. Best Crypto Exchange Australia is a great place to learn about the latest crypto exchanges in Australia.
It’s brand new technology that’s completely different from the way we normally think about money. It’s decentralized, democratic, and completely virtual. Think of it as a true intersection between technological innovation and the economy.
An estimated 101 million verified people are using cryptocurrency worldwide, and its popularity isn’t showing any signs of slowing down.
The answer is a very unsatisfying… it depends.
First of all, there are countless different types of cryptocurrency and they all come along with different advantages and drawbacks. As discussed in this article, Ethereum and Bitcoin are very volatile, but also have great potential for high profits. Basically, you’ll lose big or win big. These kinds of investments aren’t for the faint of heart and are best left to those with money (and deep industry knowledge) to spare.
Some kinds of cryptocurrency, like Tether, are more reliable. Since Tether is literally a stablecoin, you know they care about stability. However, stablecoins can also be fraught with other issues related to the institutions they rely on, so they aren’t necessarily fail-safe options either.
Overall, we’d say that if you’re willing to do the work, learn about cryptocurrency and blockchain technology, and truly believe in the power of cryptocurrency in the future, cryptocurrency can make a great investment. Just make sure you know what you’re doing and don’t put all your eggs in one basket.
We hope that this guide gives you a solid starting point into the world of cryptocurrency. However, this information is just the tip of the iceberg. There’s a massive wealth of knowledge about cryptocurrency out there and it’s constantly growing and shifting.
If you’re truly interested in learning more about cryptocurrency and maybe even investing in it in the future, we’d recommend using this article as a base and start doing your own research. Start with the three most talked about cryptocurrencies: ethereum, bitcoin, and tether, and see where the wind takes you after that.
Written by Sydney Triggs
Sydney Triggs is a [content] writer, editor & educator from Vancouver, Canada currently settled in Barcelona, Spain. She’s written hundreds of articles about marketing, travel & leisure, fashion, sustainability, technology, finance & investment, remote work and human resources, as well as more personal fiction and thought pieces.